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Year: 2016

  • International Org. | Part 2 | SAARC (30+ years in existence)

    We discussed MGC and BIMSTEC in the last post here. We covered both of them in one single post and there is a reason for it.

    Rule of thumb for assigning importance to an organisation (for IAS Mains or Pre)

    • Who are the participating countries? Are they heavyweights?
    • Any observers? When an international organisation catches interest, lot of countries line up for an observer status. This is a litmus test for the growing importance and credibility of an organisation because the world is starting to take notice!
    • Was the organisation in news recently? A mild yes? Prelims worthy. If embroiled in some controversies (prolonged dialogues), then Mains worthy!

    As of Feb 2016, MGC has 6 member countries & 0 observers. BIMSTEC has 7 member countries & 0 observers.

    But our next guest – SAARC, has  8 member countries and 9 observers (including China, US, EU, Japan).

    The South Asian Association of Regional Cooperation (SAARC) completed 3 decades of its existence in 2015. While it is impossible to compress its evolution in a single post, we will do well to get you upto speed and be aware of the major controversies surrounding SAARC (analysis, analysis and more analysis).

    When? 1985

    Origins:

    Member countries – Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined SAARC as its eighth member state in April 2007.

    Observers – States with observer status include Australia, China, the European Union, Iran, Japan, Mauritius, Myanmar, South Korea and the United States

    After independence, the countries of South Asia, which under British colonial rule, functioned like a composite whole that had both transport linkages and economic inter-dependence, wanted to portray a more independent image.

    They began functioning as autonomous economic units with protective trade regimes for the fear of political, economic autonomy in the region. These countries were often mired in bilateral conflicts (Indo – Pak, Pak – B.Desh) and that took a toll on region’s growth and prosperity. Hence, SAARC charter was build around a common goal of improving the foreign relations within the region.

    As a founding philosophy, SAARC prudently kept bilateral contentious issues out of the scope of the regional cooperation. It was believed that the inclusion of bilateral issues would hamper multilateral initiatives. SAARC was not set up as a bilateral dispute settlement mechanism. Did that really help evolve SAARC into a better organisation? We shall see.

    Why do nations come together to form groupings?

    Short answer – Economics & power struggle!

    Long answer –

    1. Nepal – had difficulties with India on various issues. Harnessing Nepal’s river water was one of the key considerations. Nepal wanted to diversify technical cooperation on hydroelectricity with other countries (to avoid complete dependence on India)
    2. Bangladesh – Another country which was suspicious of India and wanted to diversify its foreign relations. At that time Bangladesh had serious problems with India on the issue of the sharing of the Ganga water. Even though bilateral struggles were kept outside the purview of SAARC, Bangladesh had a hope to become a major player in the region
    3. Sri Lanka – was initially reluctant to join SAARC. However, due to its own ethnic crisis it became interested in the association expecting it would help assuage some of its apprehensions regarding India
    4. Pakistan – Only one goal – counter India’s influence
    5. Bhutan & Afghanistan – Let’s leave them for time being!

    Feel good about India’s overarching influence in the region for a moment.

    What were the mandates for SAARC and how far has it come to fulfill them?

    The SAARC Charter clearly lays down that cooperation among member-states will be based on sovereign equality, territorial integrity, political independence and non-interference in internal affairs.

    The Charter further states that such cooperation will not be an obstacle to other bilateral or multilateral cooperation or be inconsistent with them.

    Brings us back to the point that SAARC chose to keep bilateral disputes out of discussion and focus on the multilateral (economic, strategic) issues. This did not always work in its favour. Smaller member countries often found it difficult to overcome their political goals and limited national agendas. This often stalled progress.

    Want to read about one such issue with SAARC?

    How does SAARC carries on with its activities?

    On the administration side, the SAARC Secretariat established in Kathmandu is supported by Regional Centres established in Member States. They are quite a few and not so relevant for your exam prep. Suffice to say that, SAARC members are supposed to meet every year (Annual Summits).

    In the last 30 years, we have witnessed 18 summits. The last one was held at Kathmandu in 2014 and the motto was – ‘Deeper Integration for Peace and Prosperity’.

     The 19th SAARC summit is to be held in Pakistan sometime in 2016.

    How did the 18th Summit (2014) go?

    1. The theme of the summit was “Deeper Integration for peace and prosperity.” But member countries failed to sign two major agreements on rail and road connectivity
    2. The pact on energy was signed though! This will enable greater cooperation in the power sector
    3. Why were the rail and road connectivity agreements not signed? Pakistan held back, saying it still had to complete its “internal processes” regarding these pacts
    4. Any new initiative proposed by India? 
      • India promised to launch a satellite for the region by SAARC Day in 2016
      • Set up a Special Purpose facility in India to finance infrastructure projects in the region
      • Ease business visas by launching a SAARC business traveller card
      • Suggestions for establishing a SAARC regional Supra Reference laboratory to fight common diseases (TB, HIV)

    China’s intrusion into SAARC?

    1. Pakistan called for a more prominent role for observers in the future—mostly China
    2. Nepal and Sri Lanka also support this, and China itself is actively seeking a greater role in SAARC
    3. India responded by saying that economic cooperation between the existing members must be strengthened before expanding membership. Close shave!

    Comparing ASEAN with SAARC

    #1. SAARC is a lost cause – The motivation for launching these two forums – ASEAN (for south east asia) & SAARC (for south asia) were almost similar. Both were guided by a common hope to resolve disputes and a thirst for economic growth.

    Asean members had serious interstate disputes which they decided to forget. On the other hand, Saarc members insisted that disputes be resolved first, before economic cooperation could start. Asean nations were inclined to be trading nations; Saarc nations were inclined to be warlike. Asean moved to conflict-avoidance mechanisms; Saarc refused to discuss bilateral disputes.

    Saarc had to suffer an Indo-Pakistan war at Kargil started by Pakistan in 1999, which prevented three Saarc summits from taking place. India has given Pakistan the most favoured nation status but Pakistan has not reciprocated.

    #2. It’s unfair to compare SAARC with ASEAN – The ASEAN countries did not have contested ideologies, such as the one based on two-nation theory (Indo-Pak). The countries comprising ASEAN came together to defend themselves from the communist threat. Such external threat was absent in the case of SAARC. Rather as you see above, India was considered as a threat by some member countries.

    Fair enough! Let’s move to the economics of SAARC.

    South Asia Free Trade Agreement (SAFTA) and the complexities surrounding it

    New to FTAs/ PTAs/ trade agreements in general? Read about the different types of trade agreements.

    Safta was signed by the South Asian Association of Regional Cooperation (SAARC) countries in January 2004, in Islamabad. The agreement was a migration from SAPTA to SAFTA (Preferential to Free).

    India allows duty-free access to goods from Sri Lanka, Nepal, Bhutan and Bangladesh.We also reduced the ‘sensitive list’ it maintains for these countries to 25 items.

    South Asian countries in general have competitive economies. The trade structure is mostly tilted towards primary goods. The countries of the region in general target their finished goods to foreign markets. Primary products are goods that are available from cultivating raw materials without a manufacturing process.

    SAFTA was expected to bring down illegal trade

    It was expected that SAFTA would bring much of the illegal trade in the region to the official level boosting all-round regional trade figures. Due to the lowering of tariff, many of the high custom duty items that are smuggled would become part of official trade. But that did not happen (to the satisfaction).

    As reality would have it, SAFTA faces an existential dilemma

    1. The volume of trade in actual terms (between SAARC nations) could is very small
    2. Intra-regional trade is still at a dismal 5% — compared to 66% for the EU and about 25% for the ASEAN. Read more – here
    3. The countries of South Asia have long negative lists and their protective trade regimes inhibit free flow of goods. Negative lists = lists of items kept outside the purview of agreement
    4. Such obstacles and restrictions have given rise to smuggling and unofficial trade
    5. The ‘rule of origin’ is a problematic clause since there are no efficient mechanisms to monitor and certify goods originating from the member countries

    What’s the silver lining for SAARC?

    Thankfully, with India pursuing its “Act East policy” with a new vigour, all is not lost. If you have been a regular with the Civilsdaily App’s Newscards, we have been closely following Indo-SAARC updates:

    If you have 20 minutes to spare, watch this RSTV sponsored discourse on 30 years of SAARC

     

    This post is a part of an ongoing series – An IAS Aspirant’s guide to cracking International Relations

  • International Org. | Part 1 | Mekong Ganga Cooperation and BIMSTEC

    This post continues from the series on International Relations for IAS Prep. Read the essential posts here –

    Of late, UPSC has developed a knack of asking factual questions involving India’s membership status/ important reports/ foundation year etc. Here’s a quick mind map to set you up with bare basics of the asia region. We will cover each and every one of them in great detail to help you understand their origins and evolutions (wrt. India).

    #1. Mekong Ganga Cooperation (MGC)

    When? 2000

    Origins: An initiative by 6 countries – India and 5 ASEAN countries, namely, Cambodia, Lao PDR, Myanmar, Thailand and Vietnam

    Relevance and Evolution

    Both the Ganga and the Mekong are civilizational rivers, and the MGC initiative aims to facilitate closer contacts among the people inhabiting these two major river basins. Key areas of cooperation under MGC were tourism, culture, education, and transport & communications.

    Despite ASEAN’s rhetoric and posturing, it remains a weak organisation incapable of handling serious challenges, economic or strategic. There has been a proliferation of trade groups carrying many (confusing!) acronyms.

    With India’s elevated status in ASEAN by 2012, the time is ripe to enter the Mekong Region. Apart from reinforcing India’s security, it will remove economic isolation of the North East Region (NER).

    There is a lack of connectivity between India, Myanmar and beyond and hence a need to build connecting corridors. Unlike the European Union, with nascent Asian economies we have to follow the “hub and spoke” process which impedes in the trade process.

    Latest developments:

    India hosted the 6th MGC Ministerial Meeting on September 4, 2012. New Areas of Cooperation added in the 6th MGC –

    1. Conservation of Rice GermPlasm – A new area of mutually beneficial cooperation in rice production techniques and downstream processing projects
    2. Enhancing cooperation among SME – India circulated a concept paper
    3. Health – Aim is to strengthen the region’s capacity to respond to the menace of drug resistant malaria and other such emerging public health threats
    4. Common Archival Resource Centre (CARC) at Nalanda University

    #2. Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)

    When? 1997 | HQ: Dhaka, Bangladesh

    Origins: BIMSTEC started off as the Bangladesh, India, Sri Lanka, Thailand Economic Cooperation Group in 1997. Myanmar joined in 1997, while Nepal and Bhutan joined in 2004 when the first summit was held in Bangkok.

    Relevance and Evolution

    BIMSTEC is said to have been encouraged by India’s Look East Policy (LEP) and Thailand’s Look West Policy.

    BIMSTEC was seen as a vital bridge between SAARC and ASEAN. Myanmar and Thailand are already in ASEAN while Japan is Thailand’s second-biggest export destination.

    But in the present context, when the members of BIMSTEC have acquired memberships in various other regional/sub-regional organisations which also promote cooperation at different levels, it might not end up being that fruitful an organisation (that it was intended up to be).

    BIMSTEC identified 14 priority areas where a member country takes lead. India is lead country for – 

    • Transport & Communication
    • Tourism
    • Environment & Disaster Management
    • Counter Terrorism & Transnational Crime

    Advantage India?

    Pakistan and China do not form member countries and this grouping provides India an opportunity to increase its sphere of influence.

    India should be more proactive towards BIMSTEC to make its LEP 3.0 a success. BIMSTEC could help India to further increase its cooperation with countries located around the Bay of Bengal along with two of its adjuncts, namely Malacca Straits and Andaman Sea.

    Transport & Communication being one of the priority focus areas – Better integration with North East region & East Asian economies is a theme to look forward to.

    What has India done for BIMSTEC?

    India and Thailand are the two main (rich) partners of BIMSTEC. With Thailand mostly embroiled in controversies, India is looked upon to take a lead and act as a catalyst. Remember the lead areas with India? Transport, Tourism, Environment  & Terrorism.

    The last meeting (3rd Summit) @Nay Pyi Taw (New Capital of Myanmar) did not see any major outcomes, but a few of worth of mentioning here are –

    1. 2015 was declared as the Year of BIMSTEC Tourism
    2. The framework agreement on the BIMSTEC FTA was signed in 2004, but it is not yet fully operational. Read more here
    3. Ratify conventions related to other areas of responsibilities

    TIP: Whenever you think about the advantage of our associations with our north eastern neighbouring countries, think of two things –

    1. Transportation woes
    2. Fighting crime syndicates (terrorism, smuggling, narcotics and what not)

    Consequently, our associations with them will look to establish new roads, routes and pacts to counter them. Of course, there is a lot in common with culture and agricultural produce etc etc. but you get the bigger picture right?

    One such project is Kaladan Multi-modal Transit Transport Project in Myanmar. It was supposed to be completed by 2015, but sigh.

    Time to Energize BIMSTEC

    How long can SAARC (30+ year old organisation) wait for India and Pakistan to sort out their bilateral issues and push forward for the broader agenda of regional economic cooperation?

    Given the current state of India-Pakistan relations, it is unlikely that Pakistan will agree to even a minimal set of economic cooperation arrangements within the SAARC framework, as was evident in Kathmandu when it refused to sign the multi-modal road and rail transport agreement. (Source – The Diplomat).

    The most important driver is going to be the BIMSTEC Free Trade Area. While a Framework Agreement has been signed, it has yet to come into force. What is FTA? Read this post on trade agreement first. 

    Point being that India needs to reallocate its priority with the new surge @ Act East and get the best out of these regional groupings where it can play a natural leader.

    UPSC ke sawaal

    #1. In the Mekong-Ganga Cooperation, an initiative of six countries, which of the following is/are not a participant/ participants? (Pre 2015)

    1. Bangladesh 
    2. Cambodia 
    3. China 
    4. Myanmar 
    5. Thailand

    Select the correct answer using the code given below.

    (a) 1 only  (b) 2, 3 and 4  (c) 1 and 3  (d) 1, 2 and 5

    #2. “Compared to the South Asian Trade Area (SAFTA), the Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation Free Trade Area (BIMSTEC FTA) seems to be more promising.” Critically evaluate. (Mains 2011)

     

  • Economics | Current Account Deficit Explained

    Countries trade with one another to buy goods not produced in domestic economy. With the advent of globalization, investment to and fro have also increased many fold. A country’s trade and other economic exchanges with the world are recorded on its external account in the form of balance of payment (BoP) transactions.

    There are two components of BoP

    1.  Current Account
    2.  Capital Account

    Let’s understand about these 2 accounts in detail and analyse what happens in case of deficit or surplus in any of the accounts.

    #1. Current Account – It deals with current, ongoing, short term transactions like trade in goods, services (invisible) etc. It reflects the nation’s net income.

    For instance, if you a buy a laptop from US, it will be a current account transaction and it will be debit on current account as you have to pay to US.

    There are 4 components of Current Account-

    1. Goods – trade in goods
    2. Services (invisible) – trade in services eg. tourism
    3. Income – investment income
    4. Current unilateral transfers – donations, gifts, grants, remittances

    Note that grants might appear as component of capital account but are included in current account as they are unilateral, create no liability. Recipient does not have to give anything back in return.

    #2. Capital Account – It deal with capital transactions i.e. those transactions which create assets or liabilities. It reflects the net changes in the ownership of national assets.

    For instance, if you buy a stocks or property in US, it will be a capital account transaction and it will be debit on capital account as you have to pay to US to buy the asset.

    Components of Capital Account

    1. Foreign Direct Investment (FDI)
    2. Foreign Portfolio Investment (FPI)
    3. External Borrowings such as ECB
    4. Reserve Account with the Central Bank

    Note here that foreign investment is under capital account but dividends and income from investment comes under current account in the category income from abroad as dividend is transferred periodically, does not result in creation of asset or liability.

    Balance of Payment (BoP) = Current Account + Capital Account = 0

    Why?

    Current Account and Capital Account always balance each other because a country always has to pay for its imports. It does so by exports or other two components of current account. If it can not, it runs deficit on current account and has to pay off by drawing off on its assets i.e. running capital account surplus.

    What is Current Account Deficit?

    • It’s simply deficit on all 4 components of current account.
    • (Export – Import) + Net income from abroad + Net Transfers
    • (Export – Import) is trade deficit
    • CAD = Trade Deficit + Net Income From Abroad + Net transfers

    Note that Trade Deficit and CAD are not one and the same. Trade deficit is only a component of CAD.

    What does deficit on Current Account imply?

    If we forget income and transfers for a moment, what it means is that we import more than what we export.

    How do we pay for that extra import?

    Either we get more foreign investment (FDI & FII) and pay via that or we borrow from foreign banks (ECB) or we will have to dip into our external reserves to pay for that amount and in the process our forex reserves come down. When forex reserves come down below a critical level, country appears on the brink of BoP crisis.

    So, is CAD such a bad thing?

    Depends on what you do with those extra imports and how you finance the deficit!

    CAD is bad because –

    1. If a CAD is financed through borrowing, it is unsustainable because borrowing lead to high interest payments in the future
    2. Attracting capital flows (hot money, FII) to finance the deficit is risky as when confidence falls, hot money flows dry up, leading to a rapid devaluation and crisis of confidence. Eg. East Asian Crisis
    3. Run a CAD necessarily means running a surplus on the capital account. This means foreigners have an increasing claim on your assets, which they could redeem any time

    However a current account deficit is not necessarily harmful

    1. CAD during a period of inward investment particularly stable long term FDI may not be a bad things as investment can create jobs. Investments will lead to higher growth will be able to pay debts back
    2. Developing countries may use CAD to buy Capital goods and later export consumer goods and thus repay the debt

    Moderate current account deficit (2% of GDP) financed mainly by stable foreign investments which creates jobs and infrastructure in the economy can be helpful in the long run as it improves productivity.

    What is this twin deficits?

    Current Account Deficit and Fiscal Deficit together are knows as twin deficits and often both reinforce each other i.e. High fiscal deficit leads to higher CAD and vice versa.

    Now it’s time to answer a few questions-

    #1. which of the following constitutes/constitute the Current Account?

    1. Balance of trade
    2. Foreign assets
    3. Balance of invisibles
    4. Special Drawing Right

    Select the correct answer using the code given below.

    1. 1 only
    2. 2 and 3
    3. 1 and 3
    4. 1, 2 and 4

    #2. The balance of payments of a country is a systematic record of

    1. all import and export transactions of a country during a given period of time, normally a year
    2. goods exported from a country during a year
    3. economic transaction between the government of one country to another
    4. capital movements from one country to another

    #3. Which of the following constitute Capital Account?

    1. Foreign Loans
    2. Foreign Direct Investment
    3. Private Remittances
    4. Portfolio Investment

    Select the correct answer using the codes given below.

    1. 1, 2 and 3
    2. 1, 2 and 4
    3. 2, 3 and 4
    4. 1, 3 and 4

    Want to read more –

    1. Budget Deficits Explained 
    2. GDP Calculation 
    3. Beggar thy neighbour

  • How to read the Economic Survey – Part 2

    economic survey

     

    Having already discussed how to best read volume one of economic survey,  I shall now discuss, what to focus on and what to leave in the volume two of this amazing document.

    Those who haven’t read part one, don’t move ahead without reading part one – How to read the Economic Survey

    At the very outset let me tell you that volume two is not that interesting and is full of facts and figures and not much of analysis. Hence only selective reading is recommended.

    There are nine chapters in volume two which basically cover happenings in the economy during last one year with some forward guidance. Chapters are pretty longish with most of them crossing 20 pages (only 9-13 pages in volume one).

    Chapter one gives broad overview of the economy and glimpses of what to expect from the subsequent chapters. After that there are chapters on fiscal policy, monetary policy, external sector, agriculture, economy and services, climate change and human development. As I have already mentioned, there’s not much of analysis and most of the chapters make for very boring reading and not much important for examination.

    There’s only one chapter which I would recommend you to read line to line, for every word is a virtual gold mine and that chapter is chapter eight, climate change and sustainable development. Please note down important points and try to understand the analysis of double counting of aid as climate finance, why CDM market is down and various issues associated with green finance.

    What else to study?

    1. As mentioned in the part one, boxes are important. But in this volume many boxes are rubbish. I am highlighting not to be missed boxes, rest you can skim through. Box 1.1, 2,3, 3.2, 3.3, 3.4, 3.5, 4.1(very imp), 4.2, 4.3 (very very imp), 5.1, 5.2, 6.1, 6.2 (very imp), 6.4 (imp), 6.5, 6.6, 7.1 (read), 7.2 (only first part related to medical tourism), 9.2.9.3
    2.  Following selected portions are recommended for line to line reading
    • Pathways to productivity in agriculture in chapter five from 5.26 to 5.61,
    • Tourism including medical tourism in chapter seven from 7.25 to 7.29
    • Issue of women employment, unpaid work and care economy in chapter nine from 9.5 to 9.23
    • Draft bankruptcy code on page no. A 4 of statistical appendix

    What else is important in volume two?

    Authentic data about GDP growth, share of agriculture, industry and services in GDP and employment, savings, investment, gross fixed capital formation, major export and import items, major trading partners etc.

    Data is dispersed in the survey so, let us make it easier for you. We will bring to you all the important data at one place as we cover economic survey chapter by chapter. In the meantime, start reading volume one from cover to cover for as I said before, they could be the best 150 pages you would ever read for exam purpose.

  • An Advance Letter to the Batch of 2017

    Dear Batch of 2017,

    Before I begin, let me convey my heartfelt wishes to each one of you.

    Heartiest congratulations to you for making it through one of the toughest examination against all odds, against all failures and against all hopes of those who thought you cannot do it!

    So, how are you all doing this morning?

    I know it is quite chilly these days in Mussoorie but then you have to blame yourself for being the brightest among the bright and deserving a seat here in this auditorium of LBSNAA.

    Just the other day when you all turned up for registration at the Academy, I had a chance to interact with few amongst you and the otherwise cursory introduction drifted into the stories of your struggles, your perseverance and your unflinching resolve to be here. And though unprecedented for an induction programme but that is exactly what I am going to talk about here today.

    Let me begin with the story of the one amongst you who was conveniently labelled a non-performer, a good-for-nothing fellow who had already flunked at the Mains thrice but still would not stop himself from working even harder. And finally this year he did it. He did it because, he had no other choice but to do it. It did not matter that he was not an IITian. It did not matter that he belonged to a remote village where electricity is a privilege. It did not matter that he had to borrow books. It did not matter that he had to face the scathing comments on every failure. The one thing and the only thing that mattered was his resolve. His resolve to do it. And he did it.

    Sitting two rows in front of him is a teary-eyed girl whose story itself is not an iota less remarkable. In fact, for her it was even more arduous. Born into a family where marrying off the girls at the earliest is the norm and where a girl who dares to study beyond high school is thought to have become ‘non-marriageable’, she not only had to fight the world outside but even within. She had to bear the vitriolic “Yeh Collectorni banengi”, “Shaadi karo aur ‘iske’ ghar bhejo”, “Ladko ke liye naukri hai nahi, inhe aur chahiye”. But today she is sitting amongst you. She too did it. She did it because she became deaf to all the voices who said she cannot do it. She did it because she became oblivious to anything that tried to take her eyes off her target. She did it because she believed she can.

    Each one of you is an example of indefatigable determination and unquenchable desire to be here. You marshalled all your courage and all your resources to single-mindedly focus on your goal. You did miss those weddings of distant relatives, birthdays, anniversaries, hug day, chocolate day and what-not day but now you know that your absenteeism in any of them did not make any difference to the world. But since you sacrificed it all that, you are today among those lucky ones who will make a world of difference to the world!

    Favourable situations did not make you successful. As is the case, they were not conducive for hundreds who still made it to be here. No universe conspired to get you what you wanted. You forced the universe to give you what you wanted.

    You could do it because you knew you don’t have to live an ordinary life till it ends and that for an extraordinary life, you have to make an extraordinary effort. And you did make that effort!

    Regards

  • Different levels of Diplomacy | Track 1, Track 2, Track 3

    The Ministerial Session of the eighth edition of Delhi Dialogue, the pre-eminent annual Track 1.5 dialogue process for brainstorming on all aspects of the ASEAN-India relationship, took place in the evening of 18 February 2016 at New Delhi.

    We will talk at lengths on the ASEAN-India relationship as we develop our introductory series on IR for IAS further, but today let’s understand diplomacy in its tracks!

    Traditionally, the term “diplomacy” referred to interaction between nation-states. More recently, however, scholars have delineated several levels of diplomacy. Tracks 1 and 2 are the most frequently used terms.

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    #1. Track 1 Diplomacy:

    Official discussions typically involving high-level political and military leaders and focusing on cease-fires, peace talks, and treaties and other agreements. Heads of states meet, have hi-tea, discuss issues and release joint statements etc.

     

    #2. Track 2 Diplomacy:

    Unofficial dialogue and problem-solving activities aimed at building relationships and encouraging new thinking that can inform the official process.

    Since it is unofficial –  you can expect to see influential academic, religious, and NGO leaders and other civil society actors who can interact more freely than high-ranking officials. Think of Baba Ramdev and Amir Khan trying to chit chat with officials of Pak Foreign ministry, cajoling them into buying an idea (hopefully for more peace and er. yoga!)

    Here’s where we see the emergence of term – Track 1.5 to denote a situation in which official and non-official actors work together to resolve conflicts. Read this press release from MEA in the light of this definition – Ministerial Session of Delhi Dialogue VIII

    #3. Track 3 Diplomacy:

    People-to-people diplomacy undertaken by individuals and private groups. It would not be further from truth if we say that the “aam aadmi” of India does not really hate his counterpart at Pakistan. Beyond the media and political blur, there are a lot of initiatives which get people closer (do we hear bollywood).

    Pakistan loves our films and actors, we love their cuisine and musicians!

    Normally focused at the grassroots level, this type of diplomacy often involves organizing meetings and conferences, generating media exposure, and political and legal advocacy for marginalized people and communities.

    #4. Multitrack Diplomacy:

    A term for operating on several tracks simultaneously, including official and unofficial conflict resolution efforts, citizen and scientific exchanges, international business negotiations, international cultural and athletic activities, and other cooperative efforts.

    Reference – UNITED STATES INSTITUTE OF PEACE

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  • Economic Survey: 6 Important suggestions which Sarkar must take

    “I am the chief economic adviser, not the chief political decider,” chief economic advisor Arvind Subramaniam said in response to a question about whether the suggestions in the Economic Survey 2015-16 will find space in the budget.

    But, you are an aspirant, aren’t you? And in a rare case that the interview panel grills you on your analysis on the Economic Survey, here’s what can save your ass!

    #1. Do something urgently on subsidies

    The survey lists seven items – kerosene, electricity, LPG, railways, petrol, diesel, aviation turbine fuel and gold – on which the implicit subsidy to the rich amounts to RS 10 lakh crore! “. . . rectifying some egregious anomalies may be good not only from a fiscal and welfare perspective, but also from a political economy welfare perspective, lending credibility to other market-oriented reforms,” the Survey says.

    #2. Work seriously on ending tax exemptions

    • No profession should escape the tax net
    • Clear reference to agricultural income, which is not taxed at all
    • While the government is working on ending tax exemptions for the corporate sector, what about the agriculture sector!

    #3. Don’t raise exemption thresholds

    • The Survey junks the theory put out by Thomas Piketty that India under-taxes and under-spends
    • Bring more people under tax net. Let the threshold stay where it is!

    #4. Spread the JAM (Jan Dhan Yojana, Aadhar and Mobile transactions) trilogy to new areas

    • How to go about it? What about its efficacy? The Survey suggests doing this based on two criteria – the extent of leakages and the extent of central government control
    • Subsidies with higher leakages have larger returns after introduction of JAM
    • It will be easier to roll out JAM in areas where the central government is the main provider of the subsidy

    #5. Focus on easier exits

    Not just about corporate exits! The Survey expands the paradigms of exits

    • Allow easier entry to encourage competition; address legal lacuna through laws (which is being done with the new bankruptcy law)
    • In the case of agriculture, exit from the current cereal-centric, regionally concentrated, input-intensive policies to pulses-oriented, regionally-broad based, more-for-less inputs system

    #6. Undertake serious reform of the fertiliser sector

    The Survey suggests a cap on the number of subsidised bag each farming household can purchase and insistence on biometric authentication at the point of sale (POS)

     

    Source: Swarajyamag

    PS: This was just a trailer. Original series on Economic Survey with back2basics reference coming soon.

  • Horrifying economic terms!

    What are real growth and nominal growth? Can someone please explain me in layman terms? Thanks a ton to the kind soul! 😛

  • Analysis | Previous year’s IAS Mains questions from IR

    The aim of this post is to give you a bird’s eye view of what is usually asked in IAS Mains. Don’t fear the IR monster but be cautious about preparing it well.

    We are going to pick up questions topic wise, from IAS Mains 2013 – 2015. Hope you remember the portions of IAS Mains (Paper 2) syllabus which deal with IR.

    1. India and its neighborhood – relations
    2. Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests
    3. Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
    4. Important International institutions, agencies and fora, their structure, mandate

    Topic: India and its neighborhood – relations

    Mains 2015 –

    Q. Project `Mausam’ is considered a unique foreign policy initiative of the Indian Government to improve relationship with its neighbors. Does the project have a strategic dimension? Discuss.
    <China as Neighbour, considered special relevance to ques, China’s Maritime silk route and answer to string of pearls>

    Q. Terrorist activities and mutual distrust have clouded India-Pakistan relations. To what extent the use of soft power like sports and cultural exchanges could help generate goodwill between the two countries? Discuss with suitable examples.
    <Shiv Sena protests over Ghulam Ali’s concert>

    Mains 2014 –

    Q. With respect to the South China sea, maritime territorial disputes and rising tension affirm the need for safeguarding maritime security to ensure freedom of navigation and overflight throughout the region. In this context, discuss the bilateral issues between India and China.
    <Remember Chinese claims, 9 dashed line [Spratlys claim] – Tension in south china sea> < The most cliched issue in foreign policy>

    Mains 2013 –

    Q. The proposed withdrawal of International Security Assistance Force (ISAF) from Afghanistan in 2014 is fraught with major security implications for the countries of the region. Examine in light of the fact that India is faced with a plethora of challenges and needs to safeguard its own strategic interests.
    <India’s large geostrategic and geoeconomic interests in Afghanistan>

    Q. What do you understand by ‘The String of Pearls’? How does it impact India? Briefly outline the steps taken by India to counter this.
    <Chinese dominant intentions in the Indian Ocean region><The most cliched issue>

    Q. The protests in Shahbag Square in Dhaka in Bangladesh reveal a fundamental split in society between the nationalists and Islamic forces. What is its significance for India?
    <Very much in news, similar to Arab spring>

    Q. Discuss the political developments in Maldives in the last two years. Should they be of any cause of concern to India?
    <Arrest of president Nasheed, cancellation of GMR deal, Indian diplomacy found wanting>

    Q. In respect of India — Sri Lanka relations, discuss how domestic factors influence foreign policy.
    <PM’s refusal to attend CHOGM summit in SL over DMK’s blackmail was the immediate context for the question>

    Q. What is meant by Gujral doctrine? Does it have any relevance today? Discuss.
    <I.K.Gujral died on nov. 30th 2012, expected question>

     

    Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests

    Mains 2015 – 

    Q. Increasing interest of India in Africa has its pros and cons. Critically examine.
    <Largest gathering of African leaders in Oct, 2014 in New Delhi>

    Q. The aim of Information Technology Agreements (ITAs) is to lower all taxes and tariffs on information technology products by signatories to zero. What impact should such agreements have on India’s interests?
    <It was on the plurilateral agenda in the upcoming WTO talks to be held after mains exam, proves importance of cursory newspapers to follow evolution of topics even a day before mains or following newscards in 15 minutes daily>

    What are newscards? Download our #1 trending android app for IAS prep!

    Q. Some of the International funding agencies have special terms for economic participation stipulating a substantial component of the aid to be used for sourcing equipment from the leading countries. Discuss on merits of such terms and if, there exists a strong case not to accept such conditions in the Indian context.
    <JICA funding DMIC require sourcing content from Japan>

    Mains 2013 –

    Q. Economic ties between India and Japan while growing in the recent years are still far below their potential. Elucidate the policy constraints which are inhibiting this growth.

     

    Important International institutions, agencies and fora, their structure, mandates

    Mains 2015 –

    Q. Discuss the impediments India is facing in its pursuit of a permanent seat in UN Security Council.
    <Very much in news due to starting of text based negotiations on security council reforms in september>

    Mains 2014 –

    Q. India has recently signed to become founding a New Development Bank (NDB) and also the Asian Infrastructure Investment Bank (AIIB). How will the role of the two Banks be different? Discuss the significance of these two Banks for India.
    <In the news, proliferation of multilateral development banks, role complementary, supplementary or competitive>

    Q. WTO is an important international institution where decisions taken affect countries in profound manner. What is the mandate of WTO and how binding are their decisions? Critically analyse India’s stand on the latest round of talks on Food security.
    <Static portion related to dispute settlement mechanism with dynamic part being WTO decision on Indian poultry import ban from US and India’s domestic content requirement for solar panels>

    Mains 2013 –

    Q. The World Bank and the IMF, collectively known as the Bretton Woods Institutions, are the two intergovernmental pillars supporting the structure of the world’s economic and financial order. Superficially, the World Bank and the IMF exhibit many common characteristics, yet their role, functions and mandate are distinctly different. Elucidate.
    <Static, repeat question from previous year mains paper>

     

    Moral of the story?

    1. IR constitutes a very important part of GS paper 2 and and also GS paper 3 (cross cutting themes of terrorism and internal security challenges in border areas having linkages with neighbouring countries) with 5 to 6 very doable questions being asked every year.
    2. Questions are mostly from current hot trending topics.
    3. Knowledge of static content helps in understanding the issue better and filling in the answer but there’s no requirement of PHD in historical aspects of relationships.
    4. International organizations are important for prelims as well so do static part of international organizations well.

  • How to read the Economic Survey

    Welcome to the introductory post. Read the subsequent parts of this exhaustive series on the Indian Economic Survey (Click Here).

     

    economic survey

    Economic survey for 2015-16 has been released. As we all know, it’s a very important document for exam purposes. You can download it for FREE from here.

    As with the last year, this year’s survey is a two volume book. Volume one deals with conceptual and analytical issues while volume two deals with the state of economy and sectors of economy in some detail with more focus on immediate issues and statistics. I have just finished reading volume one and I am going to discuss how to read this document effectively.

    There are 11 chapters in the volume one. Every chapter is important, so sit tight and read one chapter at a time and take notes. Except for chapter 1 which is some 36 pages long, every other chapter is only 9 to 13 pages long which will take about 45 min to 1 hour each for reading and taking notes.

    Chapter one basically gives broad overview of the economy, challenges and opportunities, analyses pros and cons of rapid fiscal consolidation. It also gives glimpses of what to expect from the subsequent chapters. I will suggest, you all begin with chapter one.

    Three most enlightening chapters of the survey are-

    1. Chapter 2, The Chakravyuha Challenge of the Indian Economy – It highlights the problem of difficult exit of firms just as Abhimanyu could not exit from Chakravyuha. The survey aptly describes it as “From socialism with restricted entry to “marketism” without exit“.
    2. Chapter 6, Bounties for the Well-Off – It’s a real eye opener and describes in detail government subsidies (implicit and explicit) for the well off section of society, what could only be described as Socialism for the rich and Capitalism for the poor.
    3. Chapter 7, Fiscal Capacity for the 21st Century – Best chapter of the survey by many miles. It would clear all your doubts regarding government taxation and expenditure, whether government spends less or more and how middle class simply exits from the state if state’s role is seen as primarily distributional.

    All other chapters are equally great but I found these three very different and interesting.

    Some do’s and don’ts

    1. Don’t try to finish the survey or even first volume in one go, read one chapter at a time
    2. You should read volume one from cover to cover. It’s very interesting and will help you in essay, paper 2, paper 3 as well as paper 4, yes in ethics paper
    3. Volume two is not that important. What is to be read from that will be updated tomorrow
    4. Take simultaneous notes while reading a chapter, note down important points and doubts and get them resolved in doubts clearing forum
    5. Many times, the stuff put in the box have been directly asked in Mains. Do read them properly. But some box are highly technical, for instance first two boxes of chapter one, no need to go into nitty-gritty of them. Just try to understand the basic idea.

    These could be the best 150 pages you would ever read for exam purpose. So, don’t wait for the substandard summaries to arrive in the market. You all have ample time before prelims, start reading one chapter a day. You will gain immense knowledge.

    Of course, we shall be covering important portions of survey here at CD but you should read the full volume, especially the three chapters I mentioned.